Brand rehab: how Sungjoo Group CEO Kim Sungjoo bagged an ailing German luxury brand and resuscitated it for the Asian market.

Kim Sungjoo, chairperson and CEO of Sungjoo Group, went from being the queen of South Korea's fashion franchising industry. to the savior of a tattered German brand. She was one of The Wall Street Journal's "Top 50 Women to Watch" in 2004, and Asiaweek listed her among the "Seven Most Powerful Women in Asia" in 2001. Her group operates 90 retail stores in South Korea for Marks & Spencer, Lulu Guinness and Billy Bag, with sales of US$100 million in 2005.

Two years ago, Kim obtained control of the worldwide operations of another brand she had been carrying for a number of years, the leather goods of MCM (Modern Creation Munich). Founded in the 1970s by a German entrepreneur, MCM had become highly popular in Germany, South Korea and New York by the mid-1990s. Facing internal problems and an inability to keep up with the rapidly changing economic landscape of the late 1990s, the company faltered and the brand took a deep plunge. Sungjoo Group bought MCM and took on the challenge of turning it around. CW contributor Silvia Cambie talked with Kim to find out what it takes to make a brand ready for the 21st century, and for a foreign business to be successful in Asia.

Silvia Cambie: In what way has communication helped you to build your retail business?

Kim Sungjoo: Women are our main consumers, and being one of them has helped me to understand how to communicate with them. When I started my business in Korea in the 1990s, I had to find a formula that would set me apart from powerful competitors. I chose the human touch. We are very store-oriented and like to tend to the needs of individual customers. At organized store events we take the time to talk to our customers and find out what they like. We give them a sense of belonging and make them feel like they are part of our community. We knew we were doing the right thing when we found out that 60 percent of our customers visit our stores as often as three times a week.

SC: How have communication technologies affected your business?

KS: Technological innovation is very important to us. The Asian financial crisis of 1997 acted like a brushfire on the tradition-bound ruling class, replacing it with a new "ecosystem" dominated by the younger generation. MCM clientele in Asia is very young--usually in their early to mid-20s. We discovered that they had started an MCM Cafe on Yahoo!. It was a spontaneous initiative, and we decided to support it by inviting the members of this Internet community to a store event.

SC: How do you revitalize a brand?

KS: My background in social sciences helps me to understand the reasons why women buy our bags. I also worked for Bloomingdale's in New York in the 1980s, where I was involved in the launch of brands such as Fendi, Armani and Polo Ralph Lauren. Following the liberation movement of the 1970s, women began to take leadership positions in corporate America. They needed products that reflected their new lifestyle: bigger bags with enough space to fit not only their cosmetics, combs, pins and keys, but also their books, papers and personal organizers.

The same applies now to MCM. This brand used to cater to women who were not working and had plenty of free time. Our new, 21st-century client base is composed of highly professional, widely traveled working women. For them, we are combining German precision and quality with Korean high-tech. In 2005, we hired Michael Michalsky, Adidas' former creative director, who helped to resurrect the sport brand by creating alliances with personalities from the fashion world like [designers] Yohji Yamamoto and Stella McCartney. The fact that he was willing to leave a huge brand like Adidas and join us made news all over the world, and gave the MCM brand a much-needed boost.

SC: More and more businesses in Europe and North America are discovering Asia. How would you advise such businesses to approach the Asian markets?

KS: Westerners make the mistake of believing that Asia is mainly focused on the past because of its history and traditions. Recent developments--such as unprecedented economic growth, globalization and the Internet--have created a generation of younger consumers who are currently driving Asia's markets.

Businesses from Europe and North America also tend to think that most decisions in Asian households are made by men. This could not be further from the truth. The crisis of 1997 enabled women to emerge and claim a more active role. Women are behind 70 to 80 percent of all purchases made by Asian households every year.

Foreigners also have the mistaken idea that what works in their markets is bound to work in Asia as well. What they need is a "glocal" approach: They can keep their global principles, but they need to adapt them to local conditions and tap into local talent.

less bang for the buck

When it comes to luxury purchases, style and design hold sway--not advertising.

That's the finding by U.S.-based Unity Marketing, which conducts its Luxury Consumer Tracking Study every quarter. In its second-quarter 2006 report, Unity Marketing listed the factors that least influenced U.S. fashion shoppers in their most recent purchases as exclusivity (rated very important by only 20 percent), recommendations of friends (18 percent), Internet research (12 percent), articles and reviews (11 percent), and advertising (9 percent).

"According to shoppers, advertisements didn't influence them when it came to making their last purchase," says Pamela N. Danziger, president of Unity Marketing. "However, advertising, as well as articles and reviews, is of critical importance in communicating information about the latest styles and designs, building awareness and trust in specific stores, and exposing consumers to different designers' sensibilities. So while advertising may not drive shoppers in their purchases, it plays an indirect role in the fashion sales equation."

For full survey results, go to www.unitymorketingonline.com/reports2/luxury//luxury2Q2006.html.

about the author

Silvia Cambie is the director of Chanda Communications in London and chair of the IABC/ Europe and Middle East region.